An estimated 4.5 million Ukrainians abroad send home up to $3 billion a year, helping to keep many household budgets afloat back home.
Without the money that Serhiy Hryshchenko’s mother sends from abroad, life would be much harder for the university student, husband and father of a 2-year-old boy.
“My mom went to Italy in 2000, when I entered the university in Kyiv and needed money to move to the capital from Cherkassy,” said Hryshchenko, who today lives in the small town of Vyshgorod, just north of Kyiv.
“She succeeded to find a place at a plantation where she picked mandarins for several months. Finally, she went to Sicily to look after an [elderly] woman. Then she received permission for work and living, or ‘permesso,’ in Italian.”
Similar stories can be told in millions of homes throughout Ukraine. An estimated 4.5 million Ukrainians are working abroad, almost 16 percent of the working-age population, according to the International Organization for Migration. Last year, according to various estimates, these workers sent between $1 billion and $3 billion back home to their families. That’s a sizable amount for Ukraine’s economy, which in 2008 had a gross domestic product of $180 billion and attracted only $10 billion in foreign direct investment.
The global economic crisis has heightened fears that many of these workers will lose their jobs abroad, forcing them to return to Ukraine, or have their salaries cut, leaving them with little or nothing to send home.
Those anxieties came to the forefront after riots earlier this month in Moldova. Thousands of demonstrators protested April 5 parliamentary elections that critics said were rigged for the ruling Communist Party.
But discontent is also high in Moldova because of the global economic downturn. As much as a quarter of the working-age population of the tiny nation, with only four million people, work abroad. A third of Moldova’s meager $6 billion gross domestic product comes from money sent back home from Moldovans living and working abroad.
With jobs cut and wages slashed in Europe, these remittances fell by about a third in January year-on-year, Global Insight, a risk management consultancy, told Reuters. The return of jobless migrants to a nation with limited economic opportunities – Moldova is known as the poorest country in Europe – was cited as a factor in the domestic unrest.
Luckily for Ukraine, experts predict that the country’s migrant workers – and their families – are better off than their western neighbor.
Andrew Birch, senior analyst for Europe and the former Soviet Union at U.S.-based business consultant Global Insight, said that “any further decline in living conditions will exponentially raise political tensions” in other post-Soviet countries.
“The smallest economies of the region – Moldova, Belarus, Kyrgyzstan, Tajikistan – will have the largest political impact, because these countries are so much more dependent upon these labor remittances as a share of total GDP,” Birch said. “Larger economies such as Ukraine and, say, Kazakhstan, will certainly see a negative impact of a loss of foreign sources of employment, but the direct impact of the loss of these jobs will be somewhat more muted.”
Oleksandra Kuzhel, head of the State Committee of Ukraine for Business Development, said the estimate of just more than $1 billion sent to Ukraine from workers abroad came from the state tax administration. If accurate, the amount is significant, but hardly decisive in the national economy.
Moreover, in comparison with Moldova, workforce remittances into Ukraine don’t appear to have suffered yet – or at least by as much as Ukraine’s western neighbor.
Birch said that the latest figures available, from the fourth quarter of 2008, are promising. “That quarter, while investment earnings were heavily withdrawn from Ukraine in response to the growing economic crisis, labor remittance inflows actually improved against their year-earlier level,” Birch said.
The first months of 2009 are also encouraging, suggesting that workforce remittances remain strong, said Maryna Savchenko, director of a department in Ukrsibbank. “People continue helping relatives at home” wiring them cash, Savchenko said.
So, besides having proportionally fewer workers abroad sending proportionally less money back home compared to Moldova, Ukrainian workers in other nations appear to be holding on to their jobs despite the downturn.
“Ukrainians will be the last who leave Europe,” said Mykhaylo Petrunyak, president of Association of Ukrainians in Spain. “They proved so good that they are the last to be fired.” Petrunyak said every seventh person in Spain has lost their job, but relatively few Ukrainians among them.
Roughly half of Ukrainians working abroad – or more than 2 million – work in Russia, according to the International Organization for Migration. The Russian Federal Migration Service gives an even higher estimate of 3.5 million people. In descending order, according to the IOM, the other popular nations are: Italy, Poland, Spain, the Czech Republic, Portugal, Greece, the United Kingdom and the Netherlands.
Some nations are, however, clearly discouraging foreign workers or thinking about it.
In February, the Czech Republic offered a free plane ticket and 500 euros to foreign workers who voluntarily agree to return home after losing their jobs in the economic downturn. And in March, trade unions in Poland called for restrictions on some foreign workers, partly to make room for thousands of Polish workers expected to lose their jobs in other parts of the crisis-hit European Union. Russia tightened labor migration rules in the same month.
Nevertheless, there appears to be no reported surge of out-of-work Ukrainians returning home.
“I don’t see anybody returning home,” Oksana Hrynyk said of her dozens of friends and neighbors who work in Spain, Italy, Czech Republic and Poland. Oksana and her husband, Vasyl, live in Kyiv now.
They grew up in Rudky, a small town in Lviv Oblast where 20 percent of residents, mostly women, work abroad, she estimated. In some local villages, the figure is as high as 50 percent, she said.
“My friend works in a bar in Rome,” Hrynyk said. “Now during the crisis she has more hours and fewer days off for smaller money, but still keeps the job. Our people, if they lose a job, are willing to take a worse job in a worse European country. But they won’t go home. They feel psychological pressure. They left children or parents at home who need their help. They will try to wait through the crisis abroad.”
Help from his mother is important to the household budget of Hryshchenko, the Vyshgorod resident who receives a third of his mother’s 600 euro salary each month from Italy. He also is on the receiving end of gifts, including clothes, chocolates and pasta.
“We have so many packages of pasta that it would be enough to survive nuclear war,” laughed Anna Levytska, Hryshchenko’s wife. “Olga [Hryshchenko’s mother] also sends us homemade stuffed olives that are a delicacy for our cat Lyova. Olga is lucky to have a job in that Italian family. Usually masters are very strict and fire an immigrant worker if he or she is ill. Olga had problems with kidneys and Guiseppe agreed to pay for her medicines in the hospital.”
Levytska said her 58-year old mother-in-law is not returning home to Ukraine.
“She calls and says: ‘I miss you. I think I will move back to Ukraine,’” Hryshchenko’s wife said. “Then she comes here, looks at all these economic problems and returns back to Italy.”
